MONTREAL, May 25 /CNW Telbec/ - Air Canada has entered into a Memorandum
of Understanding (MOU) with one of its principal credit card processors
whereby the parties have agreed to amend certain credit card processing
agreements under which the level of unrestricted cash required to be
maintained by Air Canada is reduced and Air Canada provides the processor with
security to be accumulated over a certain period of time.
    "The agreement negotiated by Air Canada and one of its principal credit
card processors is an important step in providing financial stability for our
company during this challenging period," said Calin Rovinescu, President and
Chief Executive Officer of Air Canada. "In the immediate term, obtaining a
funding moratorium on our pension payments remains the critical priority. We
continue to work on this and other initiatives with our unions. Moreover, we
are in discussions with several potential lenders regarding additional
financing, which will likely require labour stability as a condition to any
advance. With the cooperation of our various stakeholders, I am confident we
can achieve stability."
    The MOU provides that the level of unrestricted cash required in order to
avoid Air Canada having to provide the processor with additional cash deposits
is now reduced to $800 million. Should Air Canada maintain unrestricted cash
of more than $1.2 billion for two consecutive months, the amount of
unrestricted cash required increases to $1.1 billion. In the event that the
required level of unrestricted cash is increased, the processor will return
all security to Air Canada.
    Certain amendments contained in the MOU are conditional upon the parties
concluding formal documentation. In the event that such documentation is not
completed by June 15, 2009, the parties will revert to the original terms of
the credit card processing agreements.

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    %SEDAR: 00001324EF